OSC announces next steps in exempt market review

TORONTO, Aug. 28, 2013 /CNW/ - The Ontario Securities Commission (OSC)
today published OSC Notice 45-712 Progress Report on Review of Prospectus Exemptions to Facilitate Capital
Raising, which sets out the next steps in the OSC's exempt market review and
consideration of four prospectus exemptions. The objective of this work
is to facilitate capital raising for start-ups and small and
medium-sized enterprises (SMEs) and to modernize Ontario's exempt
market regulatory regime, while adequately protecting investors.

After reviewing feedback from a broad range of stakeholders, the OSC has
determined to consider further the following capital raising prospectus
exemptions:

a crowdfunding exemption;

a family, friends and business associates exemption;

an offering memorandum exemption; and

a streamlined version of the existing rights offering exemption
currently available across Canada.

"The exempt market plays an important role in Ontario's capital markets,
especially for start-ups and SMEs," said Howard Wetston, Q.C., Chair
and CEO of the OSC. "It is important as a securities regulator that our
continued work in this area promotes an exempt market that is
innovative and globally competitive and that facilitates capital
raising while protecting investors."

This work is a priority for the OSC and any resulting proposals will be
brought to the public for comment before making any final decisions.

2. Family, friends and business associates exemption - Consider a
version of the family, friends and business associates exemption
currently available in other Canadian jurisdictions with conditions
that could mitigate any concerns identified with the existing
exemption.

3. Offering memorandum exemption - Propose an offering memorandum
exemption that is substantially harmonized with the existing model
available in Alberta and certain other Canadian jurisdictions, while
considering whether there is a need for additional measures to protect
investors.

4. Exemptions based on existing security holder base - Consider whether
the existing rights offering exemption could be streamlined to improve
its efficiency and effectiveness.

Work completed to date

Published a Consultation Paper, which resulted in 102 comment letters, to consider concept ideas for
new capital raising prospectus exemptions.

Solicited stakeholder feedback through a variety of channels, including
public and targeted consultation sessions.

Investor survey: commissioned research on retail investor interest in investing in
start-ups and SMEs, including through crowdfunding.

Considered the experience of other Canadian jurisdictions with
prospectus exemptions not currently available in Ontario, as well as
international developments relevant to capital raising in the exempt
market.

Exempt market quick facts (2012)

The total amount of capital raised in Ontario increased by 20 per cent
to approximately $104 billion (2011: $87 billion). Of this amount,
approximately $37 billion was raised by issuers other than investment
funds.

The accredited investor exemption accounted for approximately $94
billion or 90 per cent of the total capital raised in Ontario's exempt
market - most used prospectus exemption. (2011: $73 billion).

The OSC is the regulatory body responsible for overseeing Ontario's
capital markets. The OSC administers and enforces Ontario's securities
and commodity futures laws. Its mandate is to provide protection to
investors from unfair, improper or fraudulent practices and to foster
fair and efficient capital markets and confidence in capital markets.